Japfa proposes 1-for-10 rights issue to pare debt

MAINBOARD-LISTED agri-food firm Japfa has proposed to undertake a renounceable non-underwritten rights issue on the basis of one rights share for every 10 existing ordinary shares, at an issue price of S$0.50 for each rights share.

If fully subscribed, the rights issue will raise net proceeds of S$93.5 million.

At the very least, the rights issue will raise net proceeds of S$67.5 million since Rangi Management, which controls 50.9 per cent of Japfa, is demonstrating its commitment and support to Japfa by irrevocably undertaking to subscribe for an aggregate of 136 million rights shares.

The 136 million rights shares would include Rangi's full entitlements as well as that of Tasburgh Limited and Tallowe Services Inc, plus up to 22.4 million of any excess rights shares that may be unsubscribed for. Handojo Santosa, Japfa's executive chairman, controls Rangi Management, Tasburgh and Tallowe.

The issue price of the rights shares represents a discount of 13 per cent to the closing price of S$0.575 per share on Wednesday, and a discount of 12.3 per cent to the theoretical ex-rights price of S$0.570 per share based on the last traded price.

Japfa said it intends to use the proceeds to repay certain of its existing borrowings, "thereby enhancing the financial flexibility of the group to capitalise on potential growth opportunities".